Part 7 · Wallets & Keys

“Not your keys, not your coins.” This part demystifies what a wallet actually stores (hint: not coins — keys) and how a 12-word phrase can back up an infinite number of addresses. It builds directly on public-key cryptography and signatures from Cryptography.

The one idea to hold onto

A wallet stores keys, not coins. Your coins never leave the chain — they live there as UTXOs, recorded in the global ledger every node holds. What your wallet holds is the set of private keys that can authorize moving those UTXOs. Lose the keys and the coins are frozen forever, on a ledger everyone can still see but no one can spend. That is why the whole part orbits one slogan: not your keys, not your coins.

Roadmap for this part

We build from the single random number up to a hardware-backed, multi-party vault:

1. Private Keys, Public Keys & Signatures — a key is a huge random number; the public key is derived one-way; signing proves ownership without revealing the key.
2. Addresses, WIF, Base58Check & Bech32 — how keys become the human-shareable strings you actually paste, and why checksums stop typos from burning coins.
3. HD Wallets (BIP32) — one seed → an unlimited tree of keys; xpub/xprv; hardened vs non-hardened derivation.
4. Seed Phrases (BIP39) — entropy → mnemonic words → seed; the optional passphrase; why the words are the backup, not the device.
5. Derivation Paths (BIP44/49/84/86) — m / purpose' / coin' / account' / change / index, and why two wallets show different addresses from the same seed.
6. Multisig & Output Descriptors — k-of-n keys, and the precise, portable way to describe a wallet’s scripts.
7. Key Security — hot vs cold, hardware wallets, air-gapping, threat models, and backup redundancy.

The recurring question, applied here

How do keys help untrusting strangers agree on one ledger? (Preview: ownership is provable by anyone with math alone — no registrar needed to say “this is yours.”)